Here at BMC Lawyers, we specialise in property, and we’re here to help walk you through one of the more complicated parts of real estate: multi-offers.
Before we can start, we cover exactly what a multi-offer entails. Essentially, if more than one buyer is making a written offer for a property, the real estate agent compiles them all and hands them over to the seller to select from.
Whether you’re a buyer or seller, it’s important to know how this situation works. Read on to find out more!
How does a multi-offer work?
Multi-offers have a reputation for being a bit of a mystery. However, the truth is quite the contrary; they can be very straightforward. The only real difference for a buyer is that they’re incentivised to put forward the best possible offer they can make to compete with other potential buyers.
What’s important to realise is that the ‘best possible offer’ doesn’t necessarily mean the highest monetary offer. For example, a seller might be more interested in a lower offer from a buyer who is able to pay immediately. The benefit is that the buyer doesn’t need to wait for financing to clear, or don’t have to wait for a house of their own to sell before they can settle.
What do prospective buyers need to do?
Real estate agents often have specific systems in place for handling multi-offer situations. The must be equipped to give advice and guidance if you’re a buyer in this situation.
When there are multiple potential buyers, all of them are notified that they are going to be entering into the situation. This gives them the chance to decide whether or not to continue with their offer, knowing that another offer may be chosen instead. There will be a due date on all offers, as they need to be processed and delivered by the real estate agency at the same time. Remember: there are no exceptions in this sort of situation if you get your offer in late!
Once all the offers are in, they are sealed to be made anonymous and confidential, and then given to the seller so they can make a choice.
Can I include conditions with my offer?
Offers on property are often conditional. If you’re buying, and you do have conditions for your offer, make sure you’ve got the time to allow your lawyer to make sure these are included. You may also need to double-check that there will be enough time for you to meet these conditions between the period of signing and settling the offer.
If you’re a seller, this is a great situation for you, as you can choose the offer that has the fewest number of conditions. This will also encourage all prospective buyers to think hard about their conditions, and only include the ones they absolutely need to. This ensures you have fewer conditions to deliberate on overall.
As a buyer, you should try to satisfy as many of your conditions as possible before you submit an offer. This way, you keep yourself protected while making an offer that’s got a higher chance of making it through the selection process. The best way to save time as a buyer is to do some of the legwork yourself. Get your finance approved early, or even get a building inspection done. You could also access the LIM early. Altogether, this should help cut down some of the conditions you want to include in your offer.
Do multi-offers cost a buyer more?
Not always! It’s easy to understand why many people think this is the case. After all, in the business world, more competition leads to higher prices. However, that’s not necessarily going to be the case for every multi-offer situation. What you can rely on is that the seller will choose the offer that is most favourable to them.
As a buyer, it’s important to think seriously about what the best offer, and how you can make your offer more favourable, even if you can’t guarantee a higher price than your competitors.
The most important things to know
There are a few crucial things you should focus on in this situation.
If you’re a buyer, try to do your research into the property as soon as possible. This can greatly assist you in making a better offer. Secondly, when you do make an offer, make sure to switch perspectives. Imagine you’ve just learned that your offer is slightly less favourable than the winning offer. Given the chance, would you make a better offer if it got you the property?
As a seller, you should know that you have the right to accept an offer without any negotiations. You can also reject all the offers, or even ask for them to be resubmitted.
Talk to the property law experts
BMC Lawyers know the NZ property law world inside and out. In fact, we even have homes on offer! If you’re looking for advice on buying or selling a home in Wellington, or properties for sale up Kapiti Coast, give us a call today, and we’ll be able to help you out.